Role of Price on Economy

Role of Price on Economy

  • Submitted By: lilgaynor
  • Date Submitted: 02/02/2011 12:00 PM
  • Category: Business
  • Words: 871
  • Page: 4
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College of Business and Hospitality Management
Evening Division
Module 3
A research paper on the role of price on economy
Submitted in partial fulfillment for the requirement of course
ECON 216 Micro Economics

January 25, 2011

ECON 216
Micro Economics
25 January 2011.

The Role of Price on the Economy

Thesis: The role of price and its overall impact on the economy.
I. Environment of price.
A. What is price
B. The value of pricing.
C. The purpose of price.

II. The functions of price and its impact on the different types of economy.
A. What are the three important functions of price?
B. The impact of price on the types of economy.

III. Incentives and the government intervention in the market.
A. The importance of incentives.
B. The impact incentives have on the market.
C. How government intervention in market

Price is a term used to describe the means by which the many millions of decisions taken each day by consumers and businesses interact to determine the allocation of scarce resources between competing uses. This is the essence of economics!

The price of goods plays a crucial role in determining an efficient distribution of resources in a market system. Price acts as a signal for shortages and surpluses which help firms respond to changing market conditions
The price plays three important functions in any market-based economic system:

The Rationing Function:

Prices serve to ration scarce resources when demand in a market outstrips supply. When there is a shortage of a product, the price is...

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